Bullish Pennant Chart pattern

Before we discuss the Bullish pennant pattern, it is necessary for us to have a prior understanding of the Bearish pennant pattern.

In this lesson we will discuss the following

1.What is a bullish pennant?

2.When does this develop?

3.How do we identify it and techniques to make profit from the second big rise in price?

What is a bullish pennant?

This pattern is bullish in nature and indicates that the current uptrend in price may continue.

It is a continuous pattern where a pause is created in the price movement in the mid way through a steady uptrend.

It creates an opportunity for long trading, looking to make profit from a second big price rise.

When does this develop?

When there is steady rise in price and looks like a triangular flag as the price moves sideways , the bullish pennant develops.

This slowly makes lower highs and higher lows.

The uptrend continues with another identical-sized fall in price.

How do we identify a bullish pennant?

The chart below is an illustration.


Enrich Broking: Pennant Chart Pattern

Number 1: Pole of the pattern

Pennant’s pole: There is a steady rise in price before the formation of flag-like pennants, known as pennant pole.

The pole indicates the start or the continuation of the uptrend.

The pole is necessary for the calculation part in placing the profit target for buy trade.

This pattern is hard to spot as the size of the triangular pennant is relatively small compared to the size of the entire uptrend .

We can learn to spot the pattern with practice.

Practice session

Identify the bullish pennants

Exercise 1: Identify the bullish pennant. Show exercise

Exercise 2: Identify the bullish pennant. Show exercise

Trading the bullish pennant

Technique 1

Trade as soon as the price breaks out of the triangle pattern.”

Enter the trade when the candlestick has closed above the pennant’s upper trend line.

Place your stop loss on the other side of the pennant, just below its lower trend line.

Before the consolidation of the market, measure the initial rise in price.

Place the profit target the same distance above the pennant’s breakout point.

The chart below is an illustration:


Enrich Broking: Pennant Chart

Number 1: Pole of the pattern

Number 2: Profit target distance (same height as the pole number 1)

1 Buy order (long entry)

2 Stop loss

3 Take profit

Practice session

Exercise 1: Where would you place the entry, stop loss and take profit? Show exercise

Technique 2

Wait for the price to rise above the pennant’s upper trend line.”

Enter your trade as soon as the price rises above the pennants upper trend line.

Once resistance breaks, place a buy order after the price retests that trend line.

The broken resistance now becomes support level.

Place your stop loss below the new support area.

Place your profit target

Measure the size of the pennants pole. Place your profit target an equal distance above the pennants breakout. (Entry of our trade)

The chart below is an illustration:


Enrich Broking: Bullish Pennant Chart Pattern

Number 1: Pole of the pattern

Number 2: Area where the resistance line has turned into support

Number 3: Take profit distance (same height as pole number 1)

1 Long entry, after the price has bounced off the trend line

2 Stop loss underneath the new support area

3 Take profit level

Practice session

Exercise 1: Where would you place the entry, stop loss and take profit? Show exercise

Nut Shell

An overview of the lesson discussed so far…

The Bullish pennant develops in a uptrend.

Buying opportunity: This pattern is bullish in nature and indicates that the current uptrend in price may continue. It indicates possible buying opportunities.

When there is steady rise in price and looks like a triangular flag as the price moves sideways , the bullish pennant develops.

Enter the trade after the resistance level has been broken, either on a breakout or on a retest of the pennants upper trend line.

Place your stop loss below the other side of the pennant.

The profit target is placed the same distance above your entry point as the height of the pole.

Frequently Asked Questions

Peak Margin-Enrich

.

Technical traders use a bullish pennant chart pattern to predict an upcoming price reversal. This type of pennant chart pattern is a classic continuation chart formation that often signals a breakout to the upside. It consists of two or three swings between support and resistance, with each pennant chart pattern target swing representing a different height.

The first swing (lowest point) establishes the support level. The second swing (highest point) establishes the resistance level. The third and final swing can end in one of two ways. This forex pennant chart pattern either breaks the resistance level or falls back down to test it before breaking out.

.

The pennant‌ ‌chart‌ ‌pattern is a continuation pattern that occurs after an extended move in the market. It's widely used on the forex charts, and many traders keep an eye on the development of the forex pennant chart pattern so they can trade it. The pattern looks like a flagpole, but ‌the pennant‌ ‌chart‌ ‌pattern‌ ‌target has a distinctive diamond shape.

It is characterized by a series of lower highs and higher lows, with the key point being that the price action narrows considerably as the pattern develops. This narrowing is referred to as contracting range and can be measured by subtracting the lowest and highest prices in the pennant‌ ‌chart‌ ‌pattern from the contracting range high and low.

.

Buying during a bullish pennant chart pattern is appropriate if you feel that the market will continue higher. When one of these pennant chart pattern targets is spotted, it means that the supply line has moved down significantly, which usually points to an increase in short-term sellers. If there are fewer buyers on hand to meet expectations for share prices, then purchasing a bullish pennant would indicate that their selling pressure has weakened. A bullish pennant chart pattern will reverse if it is anticipated that the market's price sensitivity is to lower prices.

.

The bullish pennant chart pattern is normally seen as the first sign of an upcoming bullish trend. The greater the distance between two consecutive tops, the stronger is likely to be the next uptrend. Elliott Wave Principle explains that a rising market generally shows four rising trend waves followed by a fifth that marks a change in direction. The rising wave's peaks continue higher on each successive occasion. Bullish pennant chart pattern targets have strong support levels when they are seen close to the trend line. Simply put, bearish pennant chart patterns are the indicators of bearish cycles when two consecutive bottom sections at each end of a rising trend, followed by strong downward moves, are apparent between them.

.

A bullish pennant chart pattern is where security forms a series of progressively higher highs and higher lows, forming a horizontal trend line. The implication of the price going up on all fronts is that bulls are driving prices to new highs. A bearish pennant chart pattern, on the other hand, indicates that bears have been successful in overdriving prices lower until the security makes its first high point, followed by a sudden collapse. The forex pennant chart pattern forms when there is a clear resistance level above the current price. This resistance continues to grow as price approaches it,

Top